The firm’s study found a surge in interest in fixed income ETFs across the world from 2010 onwards and attributed their popularity to a strong demand for less liquid strategies such as investment-grade corporate bonds, high-yield corporate bonds and emerging market bonds.
The market has boomed since 2010, with fixed income ETFs now accounting for a quarter of the total ETF market in Europe with total assets at $160bn – triple the level it was seven years ago.
Similarly, in the US, total assets held in fixed income ETFs has also tripled to $450bn taking up a 17% share in the market.
Sebastian Lemaire conducted the research and said there were distinct advantages in opting for fixed income ETFs as they enjoy “several layers of liquidity in normal market conditions”.
He added: “ETFs are viewed as a convenient tool to gain market exposure that would have been more complicated to access otherwise.
“Actually, ETFs can be easily traded on exchange or via a liquidity provider/market maker during trading hours and under normal market conditions.”
Ultimately ETFs can be traded and enjoy “intrinsic secondary market liquidity”, he concluded.
